22nd September 2025, Kathmandu
In response to a sharp and persistent decline in the Nepal Stock Exchange (NEPSE), a delegation of prominent investors has submitted a six-point memorandum to Nepal Rastra Bank (NRB) Governor Dr. Biswo Nath Paudel.
Investors Submit Demands to Governor
In response to a sharp and persistent decline in the Nepal Stock Exchange (NEPSE), a delegation of prominent investors has submitted a six-point memorandum to Nepal Rastra Bank (NRB) Governor Dr. Biswo Nath Paudel. The memorandum urges the central bank to take immediate action to stabilize the market, restore investor confidence, and foster a more dynamic capital market. The investors’ key concerns center around market volatility and the need for greater liquidity.
Key Demands for Market Stabilization
The six demands presented by the investors are aimed at addressing what they perceive as the root causes of the market’s “unnatural downturn.” These demands focus on policy changes that fall under the central bank’s purview, especially concerning the banking and financial sector, which has a significant influence on Nepal’s capital market.
- Facilitating BFI Trading in the Secondary Market: The investors’ primary demand is for NRB to create provisions that would allow banks and financial institutions (BFIs) to trade more freely in the secondary market. This would increase market liquidity and help stabilize stock prices during periods of volatility.
- Removing Limits on Personal Share-Backed Loans: The delegation requested the complete removal of restrictions on individual share mortgage loans. This would allow investors to use their existing portfolios as collateral to access credit, increasing their buying power and potentially providing a much-needed boost to the market.
- Lifting Dividend Caps for Microfinance Institutions: The memorandum called for the elimination of dividend limits on microfinance companies. Investors argue that these restrictions discourage investment in a sector that is crucial for financial inclusion and rural development.
- Revising Limits on Bank Investments: The group proposed adjusting the current ceiling on how much BFIs can invest directly in the capital market. Increasing this limit would enable greater institutional participation and add much-needed depth to the market.
- Increasing Share-Backed Lending Limits: The investors demanded that NRB raise the lending limits for share-backed loans, which would enhance liquidity for individual investors. This is a crucial demand, as higher lending limits could empower investors to take advantage of market dips.
- Policy Reform for Non-Resident Nepali (NRN) Investors: The final demand urges the government and NRB to revise policies to make it easier for Non-Resident Nepalis (NRNs) to invest in the Nepali capital market. This would not only attract new capital but also tap into a valuable source of foreign investment.
The Current Context and NRB’s Stance
The investor delegation, which included representatives from the Share Investors Association Nepal, Nepal Capital Market Investors Association, and Independent Capital Market Investors Association, met with Governor Paudel on September 21, 2025. Their concerns come in the wake of a recent market downturn where the Nepal Stock Exchange (NEPSE) has experienced significant losses, with the benchmark index recently plunging by 6% in a single day, leading to a full-day shutdown of trading. The market volatility is also linked to the recent nationwide “Gen-Z” protests and subsequent political instability, which have shaken investor confidence.
While the NRB has not yet provided a formal response to the memorandum, Governor Paudel assured the delegation that their concerns would be carefully reviewed. In a recent statement, the Governor has emphasized the importance of an “investment-friendly environment” and “legal clarity” to revive the national economy. His previous statements have also highlighted the need to attract foreign investment and boost the morale of the private sector, which aligns with some of the investors’ demands. The central bank is expected to consult with other regulatory bodies, such as the Securities Board of Nepal (SEBON), to explore potential policy changes.
The Broader Implications
The meeting highlights the critical role of Nepal Rastra Bank in the country’s capital market. Due to the significant presence of banking and financial institutions on the NEPSE, NRB’s monetary policies and regulations directly impact market sentiment and liquidity. The investors’ demands reflect a belief that a more supportive and flexible regulatory framework is necessary for the market to mature and become a more reliable engine for economic growth. By addressing these demands, the central bank could not only stabilize the market in the short term but also help build a stronger foundation for long-term development.
For More: Investors Submit Demands to Governor